GM share offering biggest in US history

Sale of common stock and preferred shares together bring in $20.1 bn, which could rise if underwriters take up over-allotment

General Motors has pulled off the biggest IPO in US history after the number of shares being sold was increased to meet demand.

The total amount raised by the share offering will be at least $20.1 bn, and could rise to $23.1 bn if underwriters take up the optional over-allotment available to them. This beats the $19.6 bn raised by Visa, the payments business, in March 2008.

In response to investor demand, GM raised the number of common shares being sold in the offering from 365 mn to 478 mn, and priced them at the top end of the expected range at $33 each. The company had earlier lifted the price range from $26-$29 to $32-$33.

GM also sold 87 mn preferred shares for $50 each. These shares will convert to common shares in three years’ time.

‘I am not surprised to see the IPO oversubscribed as there was clearly more demand than GM was expecting,’ says David Whiston, a Morningstar analyst based in Chicago.

The main beneficiary of the sale is the US government, which bailed out GM in June last year when the car maker fell into bankruptcy and was de-listed from the stock market. At the time, the US took a 60 percent stake in the company, but this will fall considerably following today’s IPO.

‘Through the IPO, the government will cut its stake in GM by nearly half, continuing our disciplined commitment to exit this investment while protecting the American taxpayer,’ comments US President Barack Obama in a statement.

Along with the US government, other sellers of common stock include the national Canadian and provincial Ontario governments and the United Auto Workers union.

GM’s return to the public markets will be completed today when the company’s shares begin trading on the NYSE under the ticker symbol ‘GM’ and on the Toronto Stock Exchange under the symbol ‘GMM’.